Summary

  • Altcoins experienced a sharp decline.

  • There may be multiple reasons behind the sharp decline in altcoins.

  • So why are altcoins falling?

The cryptocurrency market woke up to a nightmarish weekend, with the leading cryptocurrency #Bitcoin (BTC) losing 2.5% since the morning. While BTC fell below $26,000, it turned out that altcoins were affected much worse. While altcoins in general saw a decline of 5% or more, some of the leading #altcoin s went completely red with declines of 10% or more.

Altcoin Prices Crashed Hard

Looking at the latest situation within the top 10, the hardest fallers are #Tron (TRX), Dogecoin (DOGE), Cardano (ADA), XRP, Binance Coin (BNB) and finally #Ethereum (ETH). . It does not surprise investors that the hardest losers are Solana (SOL), Cardano (ADA), Binance Coin (BNB) and Polygon (MATIC). There are multiple possible reasons behind this decline, but as can be expected, the first reason is known as the USA.

SEC and CFTC Pressure Challenges Altcoins

The SEC has labeled many leading altcoins, such as MATIC, BNB, ADA, SOL, and so on, as securities, and many leading exchanges have taken steps against them. Robinhood also emphasized that it will delist many of these altcoins with its recent announcement.

In fact, the only pressure doesn't come from the SEC. Another US regulator, CFTC, also turned to the cryptocurrency industry with a similar statement. The CFTC received positive news in the Ooki DAO case, which it had previously taken to court, and the decentralized autonomous organization, which was claimed to be unsuspectable, was officially sued and found to be wrong. In this context, the CFTC may have actually set a precedent with the DAO, where it imposed a fine of $643,500. This situation poses a threat to many DAOs and their associated cryptocurrencies. This may be another reason for the sharp decline in Ethereum-based tokens.

CFTC also noted the following in its statement on the subject:

“In a precedent-setting decision, the court ruled that Ooki DAO is a “person” within the meaning of the Commodity Exchange Act and can therefore be held responsible for violations of the law. The court later ruled that Ooki DAO had in fact violated the law as charged.”

Binance US's frozen funds, increased pressure and the chain effects this will create may also affect the sector. The sharp rise in the BTC price just before the expected fund freezing order came to Binance US strengthens the claim that users may have converted their funds into BTC and created an artificial rise in the market. Following this, there was a sharp decline and the market crashed.

The statement sent to the US Department of Justice under the leadership of Senator Elizabeth Warren, proposing to open an investigation against Binance, may also have had an internal impact on the industry. The US Department of Justice has not yet taken such a step in the cryptocurrency industry, and taking this could change everything for Binance. For the industry's largest stock exchange, changing everything means changing the industry, too.

Liquidity is Decreasing in the Cryptocurrency Market

All of this creates a general concern and hesitation towards the cryptocurrency industry. Jump Trading and Jane Street, one of the largest market makers in the cryptocurrency industry, had recently signaled that they would begin to withdraw from the industry. Two companies stated that they would reduce their market making activities, especially in the USA, and cited the regulations in the USA as the reason. It looks like both companies predicted the future.

These days, when liquidity in the cryptocurrency market decreases, institutional investors are also approaching the sector cautiously. CoinShares, one of Europe's largest institutional investment companies, also emphasizes that institutional investors have been out of funds from the sector for a significant period of time. This actually indicates that the investment entering the sector is less than the investment coming out. Institutional investors may have preferred to act cautiously either with the expected regulation news or with the FED interest rate expectation.

The cryptocurrency industry and the entire macro economy in general are waiting for the #FED interest rate decision to be announced on Wednesday, and in fact the decline may continue until this date. Whether the market has priced this in or not will only become clear when the decision is announced on Wednesday.

Sell in May, Go Away

Another popular possibility is the phrase “sell in may, go away”. This statement, which emphasizes that usually when the summer period approaches in the stock market, serious sales come and people focus on "relaxing" without following price movements, may be experienced with a delay in the cryptocurrency industry. Looking at previous data, this situation is generally known as a bullish sign for the cryptocurrency market, which showed a general downward trend in the third quarter.